Subscribe to our Newsletter to receive the latest updates on our content. By tapping the “Subscribe” button you will be redirected to subscription page. Subscription is free.
The East Africa Community (EAC) is a rapidly growing regional bloc. EAC has evolved since its inception in 1999 from a three-member regional bloc to its current seven members after the recent admission of the Democratic Republic of Congo (DRC) to the community. The common market within EAC brings about the free movement of goods, persons, labour, services, capital, information, and technology. Regional integration within EAC is taking shape, and with the common market, cross-border transactions will undoubtedly spike. There is an estimated population of over 280 million citizens within EAC. More interaction between individuals and businesses is expected to increase drastically, ultimately resulting in potential disputes.
The Treaty for the Establishment of the East African Community (the Treaty) anticipated these disputes and provided an elaborate dispute resolution mechanism. Article 23 of the Treaty establishes the East African Court of Justice (EACJ) as a judicial body responsible for adjudicating disputes where jurisdiction is bestowed on the court by the Treaty. One of the special jurisdictions given out by the Treaty on EACJ is to hear and determine disputes through arbitration pursuant to Article 32 of the Treaty.
Arguably, arbitration has been the most suitable, reliable, and time-saving mode of alternative dispute resolution over the years. This position is supported by the increased number of disputes referred to arbitration either through arbitration clauses incorporated into contracts or by mutual agreement of the parties. Commercial disputes are mainly submitted to arbitration due to their complexity and high value, thus necessitating an arbitral tribunal with the necessary set of experience, skills, and competence in a specific area of dispute.
The increasing cost of arbitration is a concern that will likely reduce the gains made in arbitration. Parties are now shying away from arbitration due to the high cost of arbitration attributable to the colossal arbitrator’s fees. Arbitration at the EACJ is at no cost with no fees payable to arbitrators, save for minimal one-off filing fees payable to the court when filing the claim.
This article discusses EACJ as a seat of arbitration, its significance, its arbitral jurisdiction to entertain commercial disputes, and the benefits of submitting commercial disputes for arbitration to this court as juxtaposed to local and other international arbitral tribunals.
Jurisdiction of the Court on Arbitration of Commercial Disputes
The EACJ has jurisdiction to arbitrate disputes arising from an arbitration clause contained in a commercial contract or agreement in which the parties have conferred jurisdiction on the Court. The Treaty does not limit the court’s arbitration jurisdiction over commercial disputes between citizens or entities within East Africa. Any party is free at the point of negotiations of any commercial contract to grant jurisdiction to the EACJ to hear and determine disputes arising from such contract. Similarly, once a dispute arises, parties are free to enter into a separate arbitration agreement that gives jurisdiction to the court to hear and determine the dispute.
The Court has formulated Arbitration Rules 2012, which substantially conforms to international commercial arbitration practices, enabling the court to efficiently discharge its mandate as an arbitral tribunal. These Rules govern arbitration proceedings for disputes submitted to the court.
Even though the court has put in place its Rules of procedure, only a few matters have been submitted for arbitration before the court. The leading cause of the few arbitration disputes filed with the court is the lack of visibility of the court by the business community and legal practitioners. There is, therefore, an urgent need for enhanced publicising of the arbitral jurisdiction of the court so that the objects of establishing the court are realised.
Arbitration Proceedings at EACJ
The East African Court of Justice Arbitration Rules, 2012 (the Arbitration Rules) are the substantive rules of procedure for matters submitted to the court for arbitration.
A party wishing to submit a dispute to the court for arbitration must notify the other party and then file a formal request for arbitration to the court’s registrar. The request is in the form of a statement of claim, which ideally indicates the description of the parties, the nature and circumstances of the dispute and the reliefs sought. Copies of the agreement containing the arbitration clause or an arbitration agreement must also be attached to the request as it informs the basis for invoking the court’s jurisdiction.
Parties are also given leeway to decide on the preferred number of arbitrators and propose their preferred place of arbitration, the applicable law, and the language of the arbitration. This fosters the critical element of party autonomy in arbitration. Once the request is duly filed with the court registrar, the Applicant is required to serve the claim upon the Respondent, who shall then be required to file a response and a counterclaim within 30 days.
The appointing authority of the arbitrators is the President of the court, who appoints the panel among the sitting judges of the court to constitute the arbitral tribunal. Parties are, however, at liberty to agree on a sole arbitrator whom the court’s President shall appoint by agreement of the parties. This gives the parties autonomy to identify and select a court judge with the necessary skill, competence, and experience to adjudicate the dispute.
Once the tribunal is constituted, a preliminary conference is convened to determine the issues for determination, the place for the hearing, and the mode of hearing, among other preliminary issues.
Once the hearing is concluded, the tribunal publishes a final and binding award on the parties. By submitting themselves to the arbitral tribunal, parties are deemed to have undertaken to implement the resulting award without further delay in accordance with the provisions of the treaty. The award is enforceable through the ordinary enforcement procedures of a particular country in which the award is sought to be enforced.
Advantages of Arbitration at EACJ
a. Cost Effective
Arbitration at the EACJ is free, with no fees payable to arbitrators except for one-off minimal filing fees when filing the claim. The arbitrators are selected from judges of the court. Thus, no fees are payable to them.
This is a massive benefit that arbitration at EACJ offers. The cost implication of arbitration has chased parties from the seat of justice over the years. The cost of arbitration is rising to unmanageable levels due to the exorbitant arbitrators’ fees. Arbitrators charge their fees based on time spent on an hourly basis. Due to the complexity of matters, the number of documents to be perused, and the notion of witnesses, many hours are utilised in the long run. The net effect of the accumulated hours is high fees payable to arbitrators.
Cost-free arbitration at EACJ offers a reprieve to parties and allows them to present their case comprehensively and satisfactorily without constant fear of accumulation of costs.
The arbitrators at EACJ who constitute an arbitral tribunal are court judges. These are ordinarily high-ranking and experienced judicial officers or legal practitioners in the courts of EAC partner states. The current Appellate and First Instance Divisions of the court comprise some notable, highly professional judges who sit in superior courts of their respective countries and can competently adjudicate over any complex matter submitted before the court for arbitration.
In addition to the vast experience of these judges, the court has frequently undertaken the education of these judges to increase competition and skills in arbitration. This is an opportunity that parties in commercial contracts need to consider and tap. All Judges, who are not professional arbitrators, are trained and examined by CIArb UK up to the level of Fellows. They, therefore, possess the necessary skills to undertake arbitration.
c. Party Autonomy
Arbitration at EACJ embraces party autonomy. The Rules give parties the latitude to decide and agree on various issues. This ranges from selecting an arbitrator from the judges of the court , choosing the applicable law, deciding on the place of arbitration, and even modifying the court rules to fit their preferred model. This solidifies the traditional norm of party autonomy in arbitration, which gives parties the liberty to decide how the process should be conducted.
There is a high, increasing concern or perception about arbitrator bias globally. The deteriorating impartiality and the ethical deficiencies of arbitrators are mainly attributable to home country bias. EACJ offers an opportunity for parties to disassociate themselves from home bias and have such disputes arbitrated by judges from different countries as the parties in the disputes.
It is a cardinal principle in arbitration that the proceedings should be conducted by a neutral and impartial tribunal free from bias. The model provided by EACJ in selecting arbitrators will undoubtedly eradicate the perceived bias that ordinarily entangles local arbitration.
Clothed with arbitration jurisdiction, EACJ is an open avenue for utilisation by parties entering commercial contracts, especially citizens, residents and businesses within EAC. Parties should strive to capitalise on this cost-effective arbitration avenue. Despite the many advantages, EACJ as a seat of arbitration continues to suffer a visibility challenge as there is limited knowledge of the Court among the business community and legal practitioners, resulting in limited usage of the Court. In our future articles, we will highlight some of the challenges faced by EACJ as a seat of arbitration and suggest possible solutions.
Partner states should set the pace for utilising EACJ’s arbitral jurisdiction by giving competence to the court to arbitrate over disputes emanating from all contracts entered by the respective governments and their institutions. This will be a positive step by the partner states towards fulfilling their obligations of fostering regional integration under the treaty.
The EACJ, in its Strategic Plan 2018-2023, has endeavoured to publicise the court to increase its visibility within EAC and globally. Once the arbitral jurisdiction of the court is well publicised, the business community within EAC and outside will start reaping the additional benefits associated with this court.
Should you have any questions regarding the EACJ as a seat of arbitration for commercial disputes, please do not hesitate to contact Faith M. Macharia.
George Sakimpa- Associate